“To Be or Not Be” – A Trustee That Is

October 28, 2022

By Fhara Pottinger

“To be or not be” – a trustee that is – that is the question. Apologies to the Bard, but the reason for the borrowing will soon be apparent.

THE ISSUE

Does an estate trustee need to have expertise in the subject matter of an estate’s single most valuable asset? This was the live issue in the case of Meuse v. Taylor.

THE CASE

The subject asset in question in this estate was a controversial portrait known as the Sanders portrait, which is argued to be a portrait of William Shakespeare painted while he was alive. If accepted as a genuine likeness of Shakespeare, it may be worth tens of millions of dollars because there are few other known contemporary depictions of the great writer. If it is just a more recent attempt to paint the likeness of Shakespeare, it is either worthless as a fraud or at most has a curiosity value. The ability to properly value and market the painting will determine the value of the estate.

Taylor had been appointed as an alternate executor in the will of Mrs. Sullivan, the last owner of the portrait. He had been the long-time accountant for Mrs. Sullivan who died eight months after her husband, who had inherited the painting from his mother. Various other parties claim an interest in the painting, either an ownership interest or as creditors. Meuse claims expertise in the valuation and sale of art that Taylor simply does not have. Meuse also claims to have performed work or loaned money to the Sullivans in expectation of payment when the painting is sold. The residual beneficiaries of the Sullivan estate are charities which supported Meuse’s position that he ought to replace Taylor as executor.

A BIT OF LAW

Replacement of a trustee is not that simple. As the judge hearing the application said, it is “not a beauty contest”. A court will assume that the deceased’s choice of trustee should be respected absent compelling evidence that requires removal of an estate trustee. The Court of Appeal has described it as requiring a ”case of clear necessity”.

That means that it does not matter whether or not Meuse might be a better choice as trustee than Taylor. Courts do not second guess the deceased’s choice of trustee without good reason.

The principles on an application to remove an estate trustee have been summarized as:

(1)      the court will not lightly interfere with the testator’s choice of estate trustee;

(2)      clear evidence is required that removal of the trustee is necessary;

(3)      the court’s main consideration is the welfare of the beneficiaries; and

(4)      the estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the trust.

The beneficiaries’ preferences are only relevant in a situation where the executor is hostile towards the beneficiaries or the relationship between the executor and the beneficiaries is so broken that it may impede the administration of the estate. Even a certain degree of conflict between trustee and beneficiary is not sufficient for removal. The evidence must show that the trustee is unable to exercise their powers under the will in an impartial and objective manner.

LOOKING AT THE FACTS AFTER REVIEWING THE LAW

In a relatively short time, Taylor had taken significant steps as estate trustee, as explained by the judge at paragraph 20 of the decision:

  • He had applied for a certificate of appointment as estate trustee;
  • He had obtained a comprehensive reporting letter from the lawyer acting for the estate when he took over, and had obtained and reviewed financial, legal, and business records relevant to the administration of the estate;
  • He had identified potential creditors of Mrs. Sullivan’s estate. This is a complex and ongoing task given the number of parties alleging that they have a stake in the proceeds of the sale of the Sanders Portrait;
  • He had completed Mr. and Mrs. Sullivan’s 2019 and 2020 tax returns;
  • He had hired an antiques expert, Janet Carlile, to assist in selling the Sanders Portrait by identifying auction houses that could assist in the sale, and contacting them to see if they are interested;
  • He had contacted auction houses directly;
  • He had discussions with Christie’s auction house about the possibility of shipping the Sanders Portrait to London so that an independent expert can authenticate it as a contemporaneous portrait of Shakespeare and express an opinion as to its value on the open market;
  • He had retained legal counsel in Ottawa to assist with the administration of the estate; and
  • He had communicated with Gowlings in respect of their secured claim[1] and their position on the case.

Meuse attempted to raise a few issues about the administration of the estate, but the judge described those issues as “frankly inconsequential”.

THE RESULT

An estate trustee is not required to have subject matter expertise about the estates assets, experience in administering estates, or any particular training, knowledge, or education. For example, a trustee administering an estate with a house as its primary asset does not have to be a real estate broker or have any knowledge about selling houses. A trustee can always retain appropriate experts. As the judge said in this case: “what is important is that the testator had confidence that the individual appointed will carry out the wishes expressed in their will.”

Mrs. Sullivan had expressed that confidence in Taylor. In addition to the sale of the portrait, an estate trustee has many other functions, some of which Taylor had already taken care of. The estate info involves complex legal accounting insurance and tax issues. As an accountant, Taylor is familiar with some of these and could access experts to assist with others.

As a result, the judge did not have to consider whether or not Meuse would be an appropriate replacement trustee and confirmed that Taylor will continue as the estate trustee.

IS THIS JUST A COLOURFUL STORY WITH NO PRACTICAL APPLICATION?

Shakespeare’s plays have survived because they are colourful stories that teach timeless lessons with broad relevance. How relevant is this decision?

Although it is a recent case at the time of writing this article, Meuse v. Taylor has already been applied in at least one Ontario Superior Court decision in which the chief asset was a house, the very example given in the Meuse case to explain why a trustee does not need to be a subject matter expert, and a very common sort of estate. It also differs from Meuse in that the deceased died without a will so the deceased’s choice was not a factor.

In Letourneau v. Summers as Estate Trustee the applicant was the principal beneficiary of her deceased son. She agreed to have one of her sons as trustee because she was elderly and not in good health. Almost immediately, problems developed between the two. The applicant believed that the trustee was acting in his own interests, hoping to buy the house for his own benefit. She wanted to replace the trustee with another of her sons. The evidence of acting in his self-interest, acting contrary to the wishes of the beneficiaries, and the failure to communicate were all good reasons for the replacement of the trustee to ensure that the value of the estate was not endangered.

TAKEAWAYS

  • An estate trustee does not need to be a subject matter expert with respect to the primary assets of an estate
  • A court will not easily interfere with the choice of trustee in a will
  • The application is not a “beauty contest”
  • Even where there is no will, though the welfare of the beneficiaries is important, a simple conflict between the trustee and some or all of the beneficiaries is not sufficient reason to replace the trustee
  • In order for a trustee to be removed, there must be clear evidence the trustee’s acts or omissions will endanger the administration of the estate

HOW WEILERS LAW CAN HELP YOU

Selection of an estate trustee is an important aspect of preparing your will and your estate planning. The experienced estate planning lawyers at Weilers Law can assist you in making a wise choice of someone who will carry out your wishes in a way that will not endanger your estate.

In the event that the choice of estate trustee proves to be a problem, the estates lawyers at Weilers Law work closely with our litigation team to find a solution, whether it is done on consent or an application to replace the trustee is required. We understand that this is not simply a beauty contest and will not waste your time or money foolishly. Whether you are preparing a new estate plan and will or are a concerned beneficiary of an existing estate, Weilers Law maybe the right lawyers for you.

[1] The Gowlings law firm claimed a lien for legal fees provided to the Sullivans related to the painting.